Agricore’s future may lie south of the border.
But it’s not about to happen any time soon, says the company’s chief executive officer.
“After we get Agricore done and settled, this is a platform to grow from, and that would include trying to do strategic alliances beyond Canada,” said Gordon Cummings. “But that’s something that we’d look at a year from now, not now.”
The two pools that merged to form Agricore – Manitoba Pool Elevators and Alberta Wheat Pool – had both held discussions about joint ventures or strategic alliances over the last few years with large United States agricultural co-operatives like Cenex, Harvest States and Land O’Lakes.
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The common response from the U.S. firms was that it was too bad that they couldn’t do business with one prairie-wide Canadian agricultural co-op.
Agricore might be better able to fit that bill, said Cummings, although he emphasized no such discussions are being held.
“We have not had any conversations with them since we created Agricore, and it would be premature to think of talking about doing something,” he said.
Partnerships make sense
It makes sense for Canadian grain companies like Agricore to look for partnerships and strategic alliances outside Canada, said Cummings, given the uncertainty about the fate of the Canadian Wheat Board and the single-desk wheat marketing system.
Cummings said the presence of the board allows for more Canadian-owned grain companies than would otherwise be the case.
If the board’s powers were to change dramatically, Canadian grain companies might find themselves having to sell wheat into international markets.
Multinationals like Cargill or ConAgra, with access to wheat supplies in the U.S. or Canada or Argentina or Europe, would have a huge competitive advantage over Canadian-based companies that had access only to Canadian wheat.
“We’d have a very hard time,” he said. “It’s obvious that if we could align with someone like Cenex-Harvest States in terms of grain marketing and do it together, set up a joint venture or find some way to market theirs and ours together, then we’d be in a better position than trying to do our own alone.”
Several countries, particularly the U.S., say they intend to use the next round of trade talks under the World Trade Organization, which starts next year, to go after so-called state trading enterprises such as the CWB.